Unrest in New Caledonia,the French overseas territory in the south the pacific,they exposed the conflict over nickel which, with the support of Paris, should play an important role in the European production of batteries for electric vehicles. New Caledonia ranks fifth in the world in terms of nickel reserves, a metal that is mainly used in the production of stainless steel, but also batteries for electric vehicles.
Nickel has been mined on the archipelago since the 19th century France colonized. In the seventies of the last century, the boom of industry attracted foreigners to the island, which caused conflicts between Paris and the movement for independence, which arose among the indigenous population, the Kanaks.
The 1998 agreement eased tensions, outlining a path toward island autonomy and limiting voting rights to Kanaks and settlers who had lived in New Caledonia before that year. It was also possible to hold a referendum on independence, which so far on three occasions has shown the dislike of the majority of the population to that option.
However, pro-independence parties boycotted the 2021 election, casting a shadow over the legitimacy of the results.
A new wave of unrest was triggered by a French proposal for electoral reform in New Caledonia, which would strengthen the position of French settlers. Today, Kanaks make up 41 percent of New Caledonia’s population, and residents of European origin, mostly French, make up 24 percent.
French troops remain in New Caledonia |
The French government recently proposed that Paris has, in the meantime, called into question the legitimacy of the results.
French support for losers
The main nickel producers in New Caledonia are Koniambo Nickel (KNS), Prony Resources New Caledonia (PRNC) and Societe Le Nickel (SLN), with their own processing plants and employing about 13 thousand workers, including; and supplies.
KNS is owned by the northern province of New Caledonia and the global mining company Glencore, PRNC has several shareholders, including commodity trader Trafigura, while New Caledonia’s historic producer of nickel SLN, majority owned by the French mining group Eramet.
Emmanuel Macron on visit in New Caledonia
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Most of the mines stopped working, SLN reported fire damage and reduced production in the processing plant to a minimum.
The unrest fueled a rise in nickel prices on the London Metal Exchange, which last week reached a nine-month high of $21,365 per metric ton. On Thursday, a metric ton of nickel for delivery in August cost $20,675.
Prices have normalized thanks to increased supply from Indonesia, which took half of the world market last year, while three mining companies from New Caledonia are piling up more losses. ten years, relying on the financial support of shareholders and the French state.
From 2016 to 2023, France provided 700 million euros in aid to nickel producers in New Caledonia, and is now negotiating a new package, which would oblige them to supply European battery producers. But the talks have stalled due to deteriorating relations between independence advocates and loyalists.
Paris offers hundreds of millions of euros in government loans and energy subsidies, as well as the renewal of mining permits, exports and energy infrastructure. Mining companies in New Caledonia are burdened by high energy and labor costs and technical problems.
Proponents of independence oppose the export of unrefined nickel and are in conflict with the SLN, which wants to increase deliveries. Eramet and Glencore decided to suspend investments last year as nickel prices fell.